Is Healthcare A Buy? (It’s Negative YTD)

What’s in Today’s Report:

  • Why Stocks Faded At the Open Yesterday (For the Second Straight Day)
  • Is Healthcare a Buy? (XLV is lagging the S&P 500 by 16% YTD)
  • Oil and Energy Update

Futures are slightly lower following a night of mixed economic data.

EU flash composite PMIs missed estimates (51.3 vs. (E) 51.8) and that’s a disappointment given recent stabilization in China.  But, not all the data was bad as UK Retail Sales rose 1.1% vs. (E) 0.2%, likely on Britons stocking up goods ahead of the hard Brexit deadline in late March.

Today is the eve of a three day weekend but it’s going to be busy as we get a lot of economic data and important earnings.

Important data today includes (in order of importance):  PMI Composite Flash (E: 54.3), Retail Sales (E: 0.8%), Philly Fed  (E: 10.2) and Jobless Claims (E: 206K).  As we said in Monday’s report, the stronger the data, the better for stocks as there is no inflation threat right now (so good data won’t make the Fed hawkish).

On the earnings front, some releases we’ll be watching include:  AXP ($2.00), PM ($1.00), SLB ($0.30) and HON ($1.83).

Sevens Report – What’s in the Box?

What’s in Today’s Report:

  • A Warning Sign from Box Shipments?
  • Gold Breakdown

Futures are climbing higher this morning while international shares were little changed overnight as investors digested upbeat Chinese economic data against mixed earnings.

Chinese Industrial Production (8.5% vs. E: 6.0%), and Retail Sales (8.7% vs. E: 8.3%) both handily beat expectations in March helping Q1 GDP rise 6.4% vs. (E) 6.3%. But, stabilizing Chinese growth is largely priced in to the market at current levels which is why the reaction has been largely muted by international traders.

Looking to today’s calendar, there is one economic report to watch: International Trade (E: -$53.6B) and two Fed officials are scheduled to speak: Bullard (12:30 p.m. ET) and Harker (12:30 p.m. ET).

The main focus however will remain earnings. A few notables to watch include: MS ($1.17), PEP ($0.92) before the open and AA ($0.17) after the close.

Economic Breaker Panel: April Update

What’s in Today’s Report:

  • Economic Breaker Panel Update – More Improvement
  • Earnings Review – Not the Greatest Start

Futures are tracking international shares higher this morning amid dovish central bank speak and earnings optimism.

Both Evans and Rosengren made dovish comments regarding inflation which is helping influence mild risk-on money flows this morning.

Economically, the German ZEW Survey was mixed as the headline weakened for a seventh straight month while the forward looking business expectations rose for the sixth time in a row.

Today, there are two economic reports to watch: Industrial Production (E: 0.3%) and the Housing Market Index (E: 63), and Kaplan speaks at 2:00 p.m. ET.

Earnings however will remain the primary market focus with notable reports being released from BAC ($0.65) ahead of the bell and NFLX ($0.57) and IBM ($2.21) after the close. With a mixed start to the season, if we do not see corporate results begin to improve, underwhelming earnings will become a growing headwind on equities this week.

The Easiest Way to Explain This Market To Clients

What’s in Today’s Report:

  • The Easiest Way To Explain This Market To Clients
  • Technical Market Update (Volume Not Confirming The Rally)
  • A More “Hawkish” Fed than we think?

Futures and global markets are moderately higher as global economic data beat expectations, furthering hopes of a global growth rebound.

March Chinese exports handily beat estimates, rising 14.2% vs. (E) 8.4% while EU Industrial Production wasn’t as bad as feared (-0.2% vs. (E ) -0.6%).

Focus turns to earnings this morning as all eyes will be on three big banks:  JPM ($2.32), WFC ($1.08), PNC ($2.59).  If they post solid numbers, then combined with the good Chinese economic data, we could see an extension of this rally.

Outside of earnings, we do get Import/Export Prices (E: 0.4%/0.3%) and Consumer Sentiment (E: 98.0).  Plus, Powell speaks to House Democrats but no comments on policy are expected and none of those events should move markets.

Tom Essaye Quoted in Barron’s on April 9, 2019

“It is a very quiet morning with stock futures trading slightly lower while most overseas markets edged higher overnight as investors look ahead to catalysts later in the week,” writes The Sevens Report’s Tom Essaye. Click here to read the full article.

Earnings Preview: Good, Bad, Ugly

What’s in Today’s Report:

  • Earnings Season Preview: The Good, the Bad, and the Ugly

Futures are drifting higher this morning while overseas markets were mixed during a quiet night of trading as investors look ahead to a busy calendar of events today.

There were a few economic releases o/n but none materially moved markets with international focus on this morning’s ECB Announcement (7:45 a.m. ET) and Draghi’s press conference afterwards where he is expected to shed light on TLTRO plans.

Looking into the U.S. session today, it is shaping up to be a busy one. In chronological order, there is one economic report ahead of the open: CPI (E: 0.3%, 0.2%), weekly EIA data is due out at 10:30 a.m. ET, and the Fed’s Quarles is schedule to speak at 11:50 a.m. ET.

Moving to the afternoon, there is a 10-Year Treasury Note Auction at 1:00 p.m. ET and if the outcome moves yields materially, stocks will likely follow. Then, the FOMC March Meeting Minutes are due out at 2:00 p.m. ET and the Fed’s Kaplan speaks later this evening: 7:00 p.m. ET.

With so many moving parts today, it will be important to keep an eye on yields as the bond market will offer the best read of how investors are digesting all of the day’s events.

Specifically, the 10 year yield has stabilized at 2.50% recently and if it can move higher, stocks could grind higher as well, however, if yields begin to drop like they did two weeks ago, volatility is likely to rise again, potentially significantly.

Can The S&P 500 Breakthrough 2900?

What’s in Today’s Report:

  • The Next Positive Catalyst For Stocks (Potentially)
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (Chinese Exports The Big Number This Week)

Futures are slightly weaker following a generally quiet weekend as markets digest last week’s rally.

Economic data was mixed and is putting mild pressure on stocks this morning as German exports missed expectations (-1.3% vs. (E) 0.1%), reminding markets the global economy isn’t healed yet.

U.S./China trade talks ended last week without an announcement of a deal but talks will continue this week via video-conference and a deal is still widely expected.

Today there are no economic reports and no Fed speakers, so focus will remain on any U.S./China headlines (again a deal could be announced any minute).  But, barring any surprises today should be generally quiet as the big events of the week (FOMC Minutes, Chinese data, bank earnings) happen Wed-Friday.

The Right Sectors To Own If There’s A Rebound In Growth

Today’s Report is attached as a PDF.

What’s in Today’s Report:

  • The Right Sectors To Own If There’s A Rebound In Growth

Futures are slightly higher following a generally quiet night as markets wait for this morning’s jobs report.

President Trump said he hoped the U.S./China trade deal would be done in the next four weeks, which again generally meets markets expectations.

Economic data was sparse but German Industrial Production rose 0.7% vs. (E) 0.5%, somewhat offsetting Thursday’s disappointing German Manufacturers’ Orders report.

Today the focus will be on the jobs report and the expectations are as follows:  Jobs Adds 170K, UE Rate 3.8%,  Wages 3.4% yoy.

The best outcome for stocks today would be a jobs number in the mid 100k range (not too strong, but not too weak), positive revisions to the February data and a wage number below 3.5% yoy.  That outcome likely can spark a further rally.  Conversely, any extremes on the job adds (very good or very bad) along with another hot wage number may lead to profit taking in stocks on fears of slowing growth or a more hawkish Fed.

Tom Essaye Quoted in Barron’s on April 2, 2019

“Futures are flat and international shares were mildly higher overnight as yesterday’s sizeable rally in the U.S. was…” Click here to read the full article.

Economic Data Takeaways

What’s in Today’s Report:

  • Bottom Line – “Pump the Breaks”
  • Retail Sales and ISM Manufacturing Takeaways

Futures are flat and international shares were mildly higher overnight as yesterday’s sizeable rally in the U.S. was digested amid a slight pullback in bond yields.

The Reserve Bank of Australia was the latest central bank to note downside risks in the global economy overnight.

Economically, Eurozone PPI was a mild miss: 0.1% vs. (E) 0.2% in February but inflation has been subdued and the report does not change the outlook for ECB policy.

Today, Motor Vehicle Sales (E: 16.8M) will begin to come in over the course of the morning while there is one notable economic report ahead of the open: Durable Goods Orders (E: -1.8%). There are no Fed speakers today.

With a lack of material catalysts between now and Friday’s jobs report, macro focus will be on U.S. – China trade negotiations and the bond market. If Treasury yields revisit last week’s lows, stocks will have a hard time holding the strong gains of the last few sessions, so watch bonds closely.